Bank of America stocks rise after record $17 bn penalty

Bank of America shares jumped 4 per cent Thursday despite the bank being hit with a record nearly $17 billion fine for selling high-risk mortgage bonds as safe investments. The settlement with the US Justice Department and other authorities over actions that helped spark the 2008 financial crisis was well-flagged in advance, and so did not surprise investors. Shares opened higher after the announcement and continued to push upward through the day, finishing up 4.1 per cent at $16.16. The bank said it would pay $9.65 billion in cash to resolve certain civil claims and provide $7.0 billion in relief to consumers affected by losses tied to dodgy mortgage securities it issued ahead of the 2008 financial crisis. The second-largest US bank by assets estimated the settlement would hit third-quarter pretax earnings by $5.3 billion or 43 cents per share after tax, according to AFP.